ORDER INSTITUTING PUBLIC PROCEEDINGS PURSUANT TO SECTION 21C OF THE SECURITIES EXCHANGE ACT OF 1934, MAKING FINDINGS AND IMPOSING CEASE-AND-DESIST ORDER

I.

The Securities and Exchange Commission ("Commission") deems it appropriate that public administrative proceedings be instituted pursuant to Section 21C of the Securities Exchange Act of 1934 ("Exchange Act") against Per-Se Technologies, Inc., formerly known as Medaphis Corporation, (hereinafter referred to as "Medaphis" or "Per-Se").

In anticipation of the institution of these proceedings, Per-Se has submitted an Offer of Settlement, which Offer the Commission has determined to accept. Solely for the purpose of these proceedings and any other proceeding brought by or on behalf of the Commission, or in which the Commission is a party, Per-Se, by its Offer of Settlement, admits the jurisdiction of the Commission over it and the subject matter of these administrative proceedings and consents to the entry of this Order Instituting Public Proceedings Pursuant to Section 21C of the Securities Exchange Act of 1934, Making Findings and Imposing Cease-and-Desist Order ("Order"), without admitting or denying the Commission's findings, except as for those contained in paragraph III.A. below, which are admitted.

II.

Accordingly, IT IS HEREBY ORDERED THAT proceedings pursuant to Section 21C of the Exchange Act be, and hereby are, instituted.

III.

On the basis of this Order and the Offer of Settlement by Per-Se, the Commission makes the following findings1:

BACKGROUND

A. During all relevant times, Medaphis Corporation ("Medaphis" or the "Company") was an Atlanta-based supplier of business management services to physicians and hospitals. The Company's securities were registered with the Commission pursuant to Section 12(g) of the Exchange Act. Medaphis changed its name to Per-Se in August 1999.

MEDAPHIS DEPARTED FROM GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES THROUGH THE IMPROPER RECOGNITION OF REVENUE IN 1995

B. In late 1995, a wholly-owned Medaphis subsidiary and a German company agreed to form a joint venture to market the subsidiary's products and services to clients in Europe. The licensing agreement between the two companies was executed in December 1995, although the joint venture was not actually formed until the following year.

C. Upon execution of the licensing agreement, the German company delivered a note for $3.5 million to the subsidiary for the use of its software. Medaphis, through the subsidiary, recognized this amount as revenue in the fourth quarter of 1995.

D. In January 1996, an officer of the Medaphis subsidiary sent a letter to the head of the German partner in the joint venture which stated that the subsidiary would not ask its German partner to actually pay the $3.5 million until the joint venture between the two companies had produced profits sufficient to cover this amount. The letter also stated that the subsidiary would waive any interest payments due on the $3.5 million.

E. This letter materially varied the terms of the payment due to the subsidiary, and thus Medaphis, under the licensing agreement. The terms of the payment created a contingency for the fee payable that, under generally accepted accounting principles ("GAAP"), precluded recognition of the license fee revenue until the contingency was removed. Therefore, the Company's recognition of $3.5 million of revenue from the joint venture in the fourth quarter of 1995 was improper.

MEDAPHIS DEPARTED FROM GAAP BY DIRECTING A SUBSIDIARY
TO IMPROPERLY REVERSE AN ACCRUAL FOR EMPLOYEE BONUSES

F. In the first quarter of 1996, Medaphis directed a second wholly-owned subsidiary to reverse an accrual for vested employee bonuses of $1.4 million into income. The effect of this directive was to decrease expenses and liabilities by this amount and increase income for the first quarter of 1996 on Medaphis' consolidated financial statements.

G. The employee bonus plan at the second subsidiary was a deferred compensation arrangement with vested benefits, rather than one based on operating performance and management discretion. The employees covered by this plan had already earned these bonuses from past services and their right to payment required no additional services. Accrual for this liability was appropriate and Medaphis's directive to reverse it into income was a departure from GAAP.

MEDAPHIS DEPARTED FROM GAAP BY DIRECTING A SUBSIDIARY TO CREATE UNJUSTIFIED RESERVES AND SUBSEQUENTLY REVERSE THEM INTO EARNINGS

H. In the second quarter of 1996, Medaphis acquired an information technology provider and consulting firm based in Texas. Before the completion of the acquisition, Medaphis directed the Texas firm to make entries that improperly reduced its income for the first quarter of 1996 by $2.5 million by decreasing revenues and increasing reserves. There was no corresponding probable and reasonably estimable exposure to justify the establishment of this reserve. In June 1996, Medaphis instructed the Texas firm, now a wholly-owned subsidiary, to reverse this $2.5 million reserve into income.

I. After the initial instruction from Medaphis to establish the $2.5 million reserve, the accounting staff at the Texas firm began preparing two sets of financial statements, one for internal use and a second set for reporting to Medaphis. The financial statements included in this second set of books became part of Medaphis' consolidated financial statements which were filed with the Commission and reported to shareholders.

J. Since there were no probable and reasonably estimable exposures to justify the establishment of the $2.5 million reserve, this reserve was not booked in conformity with GAAP. The improper reversal of this reserve into income at the Texas firm materially inflated Medaphis's earnings through consolidation in the second quarter of 1996.

MEDAPHIS DEPARTED FROM GAAP BY FAILING TO ACCRUE
FOR PROBABLE LOSSES ON SOFTWARE DEVELOPMENT CONTRACTS

K. In the second quarter of 1996, Medaphis learned that the subsidiary that had entered into the Joint Venture as described above expected to incur additional costs to complete certain software development and consulting contracts. Medaphis had already recognized as revenue all of the payments it expected to receive under these contracts, but now learned that the subsidiary, and Medaphis through consolidation, would in fact lose $1.4 million on these arrangements.

L. Despite being aware by the end of the second quarter that these costs would be incurred, Medaphis departed from GAAP by failing to record the losses on its books and failing to establish any reserves for them. As a result, Medaphis overstated the earnings from these contracts, and its revenue, during the second quarter by approximately $1.4 million.

MEDAPHIS'S LACK OF SUFFICIENT INTERNAL CONTROLS

M. During the quarter and year ended December 31, 1995, and the first and second quarters of 1996, Medaphis failed to have internal controls sufficient to ensure that its financial statements were prepared in conformity with GAAP. Medaphis had no formal written corporate-wide accounting policies and procedures to ensure the application of consistent accounting practices throughout the Company. Medaphis failed to keep accurate books and records. Control weaknesses resulted in incorrect books and records and misleading financial statements reported by Medaphis in filings with the Commission.

N. The Company had no policy requiring that all contracts and any modifications thereto be sent to the Company's corporate accounting department by operating units to ensure that transactions were correctly recorded. The Company had no review process to ensure that reversals of accruals into income were proper and had appropriate supporting documentation. Additionally, Medaphis did not have adequate procedures to determine and establish reserves for estimable expenses and probable losses. Medaphis improperly established reserves at a subsidiary without probable and reasonably estimable exposures, later reversing them into income. Medaphis failed to have adequate procedures to ensure the recording of reserves for probable losses on its software development contracts, even though it was aware that such losses were probable and should have been recorded.

MEDAPHIS' INACCURATE FILINGS WITH
THE COMMISSION AND LATER RESTATEMENTS

O. On April 1, 1996, Medaphis filed its 1995 Form 10-K with the Commission, inaccurately reporting that it had earned net income of $2.4 million and $0.4 million for the fourth quarter and year ended December 31, 1995, respectively.

P. On May 15, 1996, Medaphis filed its Form 10-Q for the first quarter of 1996, reporting net income for the quarter of $13.2 million, a figure which was misstated due to the inclusion of the bonus accrual which Medaphis had improperly reversed into income.

Q. Medaphis filed its Form 10-Q for the second quarter of 1996 on August 14, 1996. The net income figure of $3.3 million reported for this quarter was overstated due to the manipulation of reserves at a company Medaphis acquired during the second quarter and failure to accrue for probable losses on certain software development contracts at a subsidiary. Additionally, Medaphis overstated its results for the first six months of 1996 in this Form 10-Q because the improper reversal of the bonus accrual in the first quarter of 1996 and the items noted above were included in its year-to-date results.

R. The letter sent by an officer of the Medaphis subsidiary to its German partner in the Joint Venture (described above in paragraph III.D) was discovered in September 1996. On October 22, 1996, Medaphis announced that, because of the discovery of the letter, it was restating its operating results. It no longer recognized the $3.5 million as revenue and restated its results to report net losses for both the quarter and year ended December 31, 1995.

S. In early 1997, Medaphis restated the operating results it had previously reported for each quarter of 1996. The restatements of the first and second quarters of 1996 were to correct, among other items, the improper reversal into income of the employee bonus plan accrual, the improper reversal of reserves at the Texas firm and its failure to establish reserves for the probable losses on a subsidiary's software development contracts. The restatement materially reduced the Company's net income for the first and second quarters and changed the net income reported for the second quarter of 1996 into a net loss.

VIOLATIONS OF THE FEDERAL SECURITIES LAWS

T. Section 13(a) of the Exchange Act and Rules 13a-1 and 13a-13 thereunder require issuers of registered securities to file with the Commission annual and quarterly reports prepared in conformity with the requirements of the Commission's rules and regulations. Courts have held that it is implicit in this requirement that the information provided be accurate and contain no material misrepresentations or omissions. See, e.g., SEC v. Savoy Industries, Inc., 587 F.2d 1149, 1165 (D.C. Cir. 1978), cert. denied, 440 U.S. 913 (1979). In addition, Exchange Act Rule 12b-20 requires that these periodic reports contain all information necessary to ensure that the statements made in them are not materially misleading. No showing of scienter is necessary to establish a violation of Section 13(a). Savoy Industries, 587 F.2d at 1167. A violation occurs when a materially false statement is filed. SEC v. Kalvex, Inc., 425 F.Supp. 310, 316 (S.D.N.Y. 1975).

U. Section 13(b)(2)(A) of the Exchange Act requires issuers of securities to make and keep books, records and accounts which accurately and fairly reflect their transactions and the dispositions of their assets. Exchange Act Rule 13b2-1 prohibits any person from, directly or indirectly, falsifying or causing to be falsified any book, record or account subject to Section 13(b)(2)(A).

V. Section 13(b)(2)(B) of the Exchange Act requires issuers to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that, among other things, transactions are executed in accordance with management's authorization and that transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP and to maintain accountability for assets.

W. By the acts and omissions alleged in paragraphs III.A through III.Q, Medaphis committed violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13 and 13b2-1 thereunder. Medaphis violated Section 13(a) of the Exchange Act and Rules 12b-20, 13a-1 and 13a-13 by filing a Form 10-K for the year ended December 31, 1995, and Forms 10-Q for the first and second quarters of 1996 which contained materially misleading information regarding its financial performance. Medaphis violated Section 13(b)(2)(A) of the Exchange Act by failing to keep books and records which accurately recorded its transactions and assets for the fourth quarter and year ended December 31, 1995, and the first and second quarters of 1996. Medaphis also violated Rule 13b2-1 thereunder by causing its books and records to falsely record its transactions and revenue over this same period. Finally, Medaphis violated Section 13(b)(2)(B) of the Exchange Act by failing to devise and maintain a system of internal accounting controls sufficient to provide reasonable assurances that its transactions were executed in accordance with management's authorization and that its transactions were recorded as necessary to permit the preparation of financial statements in conformity with GAAP.

IV.

In view of the foregoing, the Commission deems it appropriate to accept Per-Se's Offer of Settlement.

ACCORDINGLY, IT IS HEREBY ORDERED, pursuant to Section 21C of the Exchange Act that Per-Se cease and desist from committing or causing any violation and any future violation of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rules 12b-20, 13a-1, 13a-13, and 13b2-1 thereunder.